CANBERRA -- Australian Prime Minister John Howard announced plans on Thursday to spend more than A$10 billion ($7 billion) to restore the nation's ailing rivers, making dwindling water supplies his priority in an election year.

The 10-year plan includes A$6 billion to repair and cover irrigation channels along Australia's Murray-Darling river basin, an area the size of France and Spain that accounts for 41 percent of the nation's agriculture.

With much of eastern Australia in its sixth year of drought, inflows into the Murray River in 2006 were at 40 percent of the previous record low, prompting authorities to cut water allocations to farmers along the 2,500 km (1,550 mile) river.

"The current trajectory of water use and management in Australia is not sustainable. In a protracted drought, and with the prospect of long-term climate change, we need radical and permanent change," Howard told the National Press Club in Canberra.

Howard, who has served almost 11 years in power and who faces a tough election in the second half of 2007, said water security was Australia's biggest environmental challenge.

The environment is shaping up as a major election issue, with the Labor opposition 10 percentage points ahead of Howard. Popular new Labor leader Kevin Rudd promises to sign the Kyoto Protocol and combat climate change.

Farmers welcomed Howard's plan and their support could shore up backing for his conservative government in a swathe of constituencies along the Murray River.

"It's a strong announcement. There are probably few issues that are more important to all Australians than the efficient management and security of water supply," National Farmers' Federation president David Crombie told reporters.

Environmentalists said the plan contained enough money to tackle the country's water problems head-on.

"The Murray-Darling system is suffering from decades of too much water being taken out, leaving rivers, wetlands and wildlife literally dying for a drink," Australian Conservation Foundation Executive Director Don Henry said.

WATER REVOLUTION

But the plan also requires the support of four Labor state governments, which have been asked to hand over their rights to run the river system to the national government.

Howard described his plan as a revolution for the world's driest inhabited continent, saying it would plug leaks and halt evaporation in Australia's major waterways and irrigation systems by paying to cover and line open irrigation channels.

The Murray-Darling catchment covers 1.06 million sq km, or 15 percent of Australia's landmass, and plays a crucial role in supporting Australia's economy and rural life.

It is also the major source of fresh water for the city of Adelaide, the capital of South Australia state, which draws 40 percent of its water from the river.

Without action, the government says supplies from the Murray could be unfit to drink within 20 years for the city of about one million.

Irrigators use an average 14,000 gigalitres of river water a year, which is about 70 percent of water used in Australia. But up to 30 percent is lost before it reaches the farms. One gigalitre is 1,000 megalitres, or one billion litres (260 million US gallons).

Howard said the plan aimed to save about 3,000 gigalitres a year, including 2,500 gigalitres in the Murray-Darling.

He also announced an inquiry to look at how to better develop vast areas of remote tropical northern Australia, which has plenty of water but where there is little farming. ($1 = A$1.28)